This week’s global growth forecast downgrade has left economists gloomy, but not everyone thinks unchecked economic expansion is a worthy goal. Australian entrepreneur and philanthropist Dick Smith told Hamish Macdonald why we need to move to zero growth capitalism, writes Olivia Willis.
While oil prices have nearly halved in the past six months and the US economy is making a comeback, it appears it’s not enough to convince the World Bank that global growth won’t fall this year. Troubles in the eurozone, a slowing Chinese economy and issues with some of the biggest emerging markets have led to a bleak outlook for economic growth in 2015.
However, while a group of global economists and former politicians convene in Washington DC to resolve what former treasurer Wayne Swan describes as a ‘lack of sustained demand to drive growth’, Australian businessman Dick Smith believes the problem ultimately lies in our ‘flawed’ economic system.
‘The present form of growth that our economic system requires - which is basically perpetual growth in the use of energy and resources - is not sustainable,’ said Mr Smith. ‘Anyone with any brains knows that it’s not possible to have perpetual anything in a closed system.’
Mr Smith told RN Breakfast that instead of finding ways to increase large-scale economic growth and prosperity, we should be looking at ways to modify the economic system over an extended period of time.
He’s called for more discussion of how we can create a new system of capitalism with a different type of growth. ‘Growth in quality, growth in efficiencies, and removing waste ... not just using more and more, because we will destroy the world for our kids,’ said Mr Smith.
In 2010, the popular philanthropist launched a $1 million cash prize incentive for anyone under 30 who could come up with a new way to deal with unsustainable population and economic growth.
The prize money still sits in the bank today, slowly accruing interest.
‘There is a lack of political will in Australia to even have the discussion,’ he said. ‘I think we could actually have an economic system that’s a capitalist system, but one with growth in quality, not quantity.’
While Mr Smith believes his unconventional approach to economic sustainability has ‘tremendous support from typical Aussies’, it has been the increases in economic inequality that have captured attention in recent months.
At the G20 Leaders Summit in Brisbane last November member nations agreed to a two per cent annual global growth target and committed to structural reforms.
Australia’s response saw a Senate committee deliver a report on inclusive growth. The report contends that wealth concentration is more than a social problem, and the implications of inequality are being felt economically.
Mr Swan, speaking in Washington, said the international community is calling for ‘a more inclusive capitalism’.
Mr Smith, however, said that capitalism in its current form requires perpetual growth in a world of finite resources, otherwise it will ‘definitely collapse’, and we’ll go into recession and depression.
‘We’re using one and a half times the world’s resources at the moment ... it’s not sustainable,’ he said.
‘One day we have to stop growth, and I think we should be talking about it now.’
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